Is Irrevocable Trust a Useful Estate Planning Tool for Californians?
In California, there are two types of a living trust: revocable trust and irrevocable trust. Many homeowners do not fully understand the difference between the two. Furthermore, a myth rooted in decades-old taxation and estate planning realities has homeowners convinced that irrevocable trust is something that could save them money by reducing their tax burden.
In this blog post, we will discuss the best use of irrevocable trust and why this is not the most beneficial estate planning tool for most California homeowners.read more
What to Do if a Rogue Successor Trustee Refuses to Sell the Property?
What happens if a successor trustee named in a living trust goes rogue and refuses to carry out their duties? What if the same successor trustee takes action but does not follow the wishes of the original trustee?
In this blog post, we are going to examine a hypothetical scenario of a rogue successor trustee and what can be done to make them perform.read more
Have a Blended Family? Get a Living Trust or Risk a Major Heartbreak
Do you know what’s the most common objection to not having a living trust? “My situation is different.” Many California homeowners genuinely believe that while a living trust may be a valuable estate planning tool for somebody else, their personal situation is somehow unique. How unique? “Simpler.” Oh, it’s just me and my wife. Or: I only have one child; we’re leaving everything to our son anyway.
Admittedly, some families may benefit from a living trust more than others, and in some cases, having a trust is an absolute must. One of such situations is a blended family. This is what we are going to explore in this blog post.read more
Do I Need Probate and How Does It Work?
Do I need probate and how does it work? These are two questions we get asked most often. While heirs in California may end up in probate court for a variety of reasons, certain situations are way more common than others.
If you are reading this article, chances are, you are going through something similar and looking for the answers. Keep reading to find out who needs probate in California and how a typical probate process plays out.read more
What Happens if You Lose Your Copy of a Living Trust?
Consider this scenario: a married couple bought a house in California many years ago. Advised by a savvy real estate agent, they saw an estate planning attorney right away and created a family trust. In the trust, they have specified who gets their assets once they both pass away.
The couple had three children. Years later, the husband died. Another decade went by, and the wife passed away as well. The children knew that their parents had a living trust set up, but this was done years ago. Now, they can’t find it.read more
What’s in a California Living Trust?
Most California homeowners at least have heard about a living trust. It’s a big binder full of documents, right? Not everyone, however, understands what’s inside that binder and what each of these documents do.
Many California homeowners do not realize that a living trust contains a list of important legal documents, in addition to a revocable trust itself.
Keep reading because in this post we are going to unpack the binder and shine some light on what a complete trust package looks like.read more
Estate Taxes, Capital Gain Taxes, and Property Taxes in Probate: How Much Will You Have to Pay?
If you are selling a California home in probate, you may be concerned about various taxes. There are three major tax categories that need to be addressed:
- Estate Taxes
- Capital Gain Taxes
- Property Taxes
Luckily, for most California residents, not all of the above taxes are going to apply. Keep reading to learn which types of taxes you must pay, and how much the process is going to cost you.read more
Full Authority VS Limited Authority in Probate: What Real Estate Agents Need to Know
While the probate process may continue for months, a property can be listed and sold in as little as 3 months, including the buyer taking possession of the property and the real estate agent collecting their commissions. This is something that many real estate professionals and heirs alike don’t always know.
Ultimately, the deciding factor on how soon one can list a probate property is the authority type. Keep reading to learn everything real estate agents need to know about full authority VS limited authority in California probate.read more
Probate and Creditors: Will Your Estate Have to Pay Them?
Very few people are completely debt-free. When a person passes away in California and they have no trust, the case goes to probate. Part of the probate process is dedicated to notifying and paying off the creditors. But do you have to pay all the creditors? Can some of the debts be wiped out? Is there a time limit on how long the creditors can keep knocking on your door, so to speak?
Continue reading to find out exactly how paying off debt works in probate and what can be done to minimize the estate’s liabilities!read more
How to Choose the Best Probate Real Estate Agent
In many California probate cases, the home is the biggest decedent’s asset. A significant number of cases involve mortgage encumbrance, and the estate does not have cash available to pay off the mortgage or any other debt that comes to light. For these reasons, many heirs decide that the best course of action is to sell the home, pay off mortgage loans, any other debts, and then divide the net proceeds among all the heirs.
While one cannot select a probate judge, a personal representative is free to choose the attorney who will represent the estate as well as the real estate agent who will list and market the property. To make sure that you get the best representation in complex probate matters, you want to choose a listing agent who either specializes or has proven experience with probate sales.read more
How to find the best living trust attorney in Lakewood, California?
The median price of a single-family home in Lakewood, California, is $699,999 (as of April 2021). If you are a responsible homeowner in Lakewood, having a living trust set up is a must.
After all, $700,000 is a lot of money for most people… If something happens to you, who is going to get the house? In addition to the main residence, some Lakewood homeowners also have one or several rental properties. Others may also have cash, stocks, bonds, businesses, etc.read more
How Much Does It Cost to Probate a House in California?
You did your own research and then checked with a qualified California attorney: probate cannot be avoided. For you to step into your parents’ shoes and become a rightful owner of the property, the house must go through the probate process at a local court.
The next question on every heir’s mind is usually the following: How much does it cost to probate a house in California? In this post, we will break down probate costs in California so, continue reading to find out what it takes to go through the probate process.read more
Why Homeowners in Downey Need a Living Trust ASAP
For most Downey residents, their home is the biggest purchase they will ever make. One cannot get a loan without purchasing home insurance and most homeowners will not think twice about protecting their assets this way. Unfortunately, not every homeowner in Downey has a living trust.
Just like many Californians, some Downey residents mistakenly think that a living trust is for wealthy individuals or families only. This cannot be further from the truth!read more
How to Become a Personal Representative in California Probate
A relative has passed away and you are about to inherit their California property. You are probably saddened by the passing of your loved one, and now you must step into their shoes and decide what you want to do with the house: sell it, rent it, maybe even live in it.
If the original owner of the home had a living trust set up, the process is easy. A living trust spells out exactly who the successor trustee or trustees are and details what happens to the decedent’s assets.read more
How to Get the Most of the Probate Petition (Judicial Counsel Form DE-111) if You Are a Real Estate Agent or Investor
If you a California real estate agent or investor and you are looking to buy probate properties at a discount, you probably have been told to pull the Probate Petition, also known as Judicial Counsel Form DE-111.
You will want to get your hands on the same petition if you hope to score a listing too – in case the heirs decide to sell the inherited home, as it contains vital information you will need to attain your objective.read more
9 Ways to Avoid Probate in California
Savvy California homeowners usually choose living trust as their estate planning tool of choice. A trust offers the ultimate “control from the grave” as it enables individuals and families to leave clear, executable instructions on how their assets should be distributed upon their death. Having a trust in place also avoids probate in California.
In addition to a living trust, there are other exceptions to probate. We are going to go over all of them in this article.read more
Will vs Living Trust in California: Which One Gives Better “Control from the Grave”?
Planning on what happens after we pass away makes many Americans uncomfortable. Pondering one’s death is hardly a desirable topic but the consequences of failing to make arrangements on what happens to your assets upon your death can be a lot more unpleasant than the planning process itself. Especially considering that we don’t get to redo our will or living trust once we pass away.read more
Recently Passed CA Proposition 19 - How it Affects Homeowner Property Taxes
The recent passage of California Proposition 19 means substantial changes to the manner in which real property is reassessed in California. These changes will bring greater flexibility to certain property owners who are over 55 or the victims of natural disasters but will mean greater restrictions on certain intra-family transfers (aka parent to child or grandparent to grandchild).read more
The New Medi-Cal Recovery Laws
For individuals who die prior to January 1, 2017, the current recovery rules will apply, however, a new day will arise starting January 1, 2017. Starting January 1, 2017, homeowners will longer have to choose between healthcare or passing their home to their children. CANHR has provided a booklet which outlines applicable rules for both the current law, and the new law.
What is Medi-Cal?
Medi-Cal is California’s version of the Medicaid program that is funded jointly by the state and federal governments. It is designed to provide free or low-cost medical assistance for low income or low-resource individuals. There are many different Medi-Cal programs, and eligibility may depend on factors such as age, disability, income or assets. Covered California is California’s version of the Affordable Care Act’s health insurance exchange. It is not a Medi-Cal program. Any tax credits or subsidies received through Covered California are not subject to Medi-Cal recovery.
New Law! Medi-Cal Cannot Touch Your Home
California Senator Ed Hernandez says that Medi-Cal recovery forces homeowners who are over age 55 and who need Medi-Cal to choose between their own health care or passing their modest homes to their children.
Many have echoed the same sentiment that millions of low-income Californians age 55 and older are reluctant to enroll in Medi-Cal because they are afraid that the state will take their house when they die. It is true that California’s Medi-Cal program has long looked to the house that mom and dad have left to their children to recoup public money spent on the parents’ healthcare in the last years of their parents’ life.read more
The Top 10 Benefits of a Comprehensive Power of Attorney
The benefits of a highly detailed, comprehensive power of attorney are numerous. Unfortunately, many powers of attorney are more general in nature and can actually cause more problems than they solve, especially for our senior population. This article is intended to highlight the benefits of a comprehensive, detailed power of attorney. A proper starting point is to emphasize that the proper use of a power of attorney as an estate planning document depends on the reliability and honesty of the appointed agent.
The agent under a power of attorney has traditionally been called an "attorney-in-fact" or sometimes just "attorney." However, confusion over these terms has encouraged the terminology to change so more recent state statutes tend to use the label "agent" for the person receiving power by the document.read more
10 Benefits of a Medi-Cal Asset Protection Trust
Never before has there been such a rapid growth in people turning 65 years of age or older and these seniors are expected to live longer than any previous generations. Living longer also means higher medical costs. Many parents spent most of their lives working to pay off their home mortgages and they would like to pass these homes on to their children. The federal government gives California approximately $17 billion per year as part of the Medi-Cal health insurance program. Medi-Cal is funded by the federal government but administered by California. Californians can use Medi-Cal to fund for their health care and still leave their house to their children if they plan ahead.read more
What's the difference between Revocable & Irrevocable Trusts?
California laws allow you to create trusts that will spare your heirs from the horrific, expensive and time consuming probate process. There are two categories of trusts: revocable trusts and irrevocable trusts. It is crucial to understand the advantages and disadvantages of each because neither one is a "one size fits all" solution.
Everybody’s life is unique and people have different objectives, needs and family dynamics. These factors will shape which type of you trust you should have . Both types of trusts allow you to transfer assets (your house) to a trustee who will administer and ultimately distribute the assets (your house) to the beneficiaries (usually your son and/or daughter) as provided in your trust. But the main difference between the two types of trusts is that the revocable trust can be changed at any time by the maker of the trust prior to the maker’s death; whereas an irrevocable trust cannot be changed without the consent of all the trust’s beneficiaries. The trust beneficiaries are the ones who are getting the assets in the trust.read more
Medi-Cal Planning Preserves Homes for Children
Aging is inevitable, but lucky for us, medical technology continues to improve, which has increased our life expectancy. As we live longer, long-term medical care costs continue to raise. The super wealthy in America can easily pay for their long-term medical costs and thus the focus of their estate planning is on how to minimize their estate taxes because their estate will be taxed at a rate of 40% of the amount that is over the federal estate tax exemption of $5.45 million per person.
However, for most middle class Americans, one of the major ways of financing their long-term medical costs is through Medi-Cal planning because for them to pay for their own long-term medical care would deplete their lifetime savings.read more
Homeowners: 2016 New CA Law to Protect Your Home from Probate
In California, there are a variety of ways to hold title to your home that will dictate who will become the new owner of your home when you die. Starting January 1, 2016, California homeowners can add a new way of holding title to their homes called the "Revocable Transfer on Death Deed" (TOD deed). TOD deed is a non-probate deed whereby you as the homeowner may deed your home to a named beneficiary and the transfer becomes operative on your death but will remain revocable until you die.
California Assembly Bill 139 created the "Revocable Transfer on Death Deed" (TOD deed) as an alternative "poor man’s" estate planning instrument to avoid probate without having a trust. It was approved on September 21, 2015 and will take effect on January 1, 2016 and expires on January 1, 2021. The TOD deed covers only one to four residential dwelling units, a condominium or agricultural land of 40 acres or less with a single-family residence. Tread more
Most Famous Tax Loophole for Real Estate Owners
Real estate owners buy real estate hoping to accumulate and build wealth for themselves and their families. However, some real estate owners are not aware of the biggest tax loophole when it comes to passing their real estate wealth on to their families.
The most famous tax loophole for real estate owners is the “stepped-up basis”. When you inherit a house, the current IRS tax code gives you a stepped-up basis in cost. Your stepped-up basis is the market value on the date of your benefactor’s death. This taxpayer-friendly rule allows heirs to sell the house they received and owe nothing to the IRS.read more
Real Estate Asset Protection
Did you know that you can create legal entities that you can use to protect you real estate assets? This article is a summary of the common ways of vesting title in legal entities that real estate investors use for asset protection.
Three legal entities that you can create are C-corporation, S-Corporation, and Limited Liability Company (LLC). Both C-corporation and S-corporation are formed by filing legal documents with the Secretary of State of California. Both of these corporations are distinct entities from the owners and thus shield the owner-shareholder(s) from personal liabilities stemming from the corporations. The difference is that the S-corporation is able to be taxed directly to the shareholders and avoids the double taxation that a C-corporation brings.read more
How Medi-Cal Can Be Dangerous to Your Home?
Many homeowners who are under the California Medi-Cal health plan are concerned about whether their homes will be taken away from their children after their deaths because they used Medi-Cal during their lives. Although, California is one of the most liberal states out of the 50 states, there some traps for the unwary to consider. Therefore, read on because one day you or your loved one might need Medi-cal. Below are some common questions that I have assembled so that homeowners can make wise and informed decisions when applying for Medi-Cal.
What is Medi-Cal?
Medi-Cal is the short name for “California Medical Assistance Program”. Medi-Cal is California’s version of Medicaid, which is the Federal Health Insurance Program for people and families with low incomes and resources. California participates in Medicaid under the name Medi-Cal.read more
What's In Your Living Trust?
This article will summarize and shed some light on what a living trust can and cannot accomplish. This article is constructed in terms of questions and answers. These are the common questions that I get in my estate planning and probate seminars.
Will vs. Living Trust: What is best for me?
A Will may not be the best estate planning document. A Will is only valid when you are dead. Furthermore, Wills need to be probated in California. A California court will need to validate the Will. The court will appoint the executor to be in-charge of your estate through the probate process. However, a living trust does not go through probate. A living trust has all the applicable California Probate Codes built into it to avoid the messiness of the probate court’s involvement.read more
Estate Tax: Will Your Family Have to Pay?
The first estate tax was imposed in 1797 to help fund a war against France. The estate tax became a permanent fixture in our tax system after World War I. The estate tax is a tax on real estate, stock, cash, and other assets transferred from deceased persons to their heirs. Will your children or heirs have to pay taxes on the house and other assets that you are leaving to them? If your children have to pay, the current estate tax rate is a whopping 40% PLUS applicable capital gains tax rate between 15% to 20%!read more
Three Estate Planning Items Everyone Needs
We all own assets in one form or another. When we die, we want to make sure that the assets are properly going to those we love. We also want to minimize any confusion, unnecessary legal fees and stress for our loved ones.
There are three essential items that everyone needs to have in place to ensure their wishes are carried out after their death.read more
Joint Tenancy Increases Unnecessary Tax Liability
When a husband and wife hunt for a home, they consider factors such as the neighborhood, the quality of the school district, curb appeal, or the condition of the house.
However, they frequently overlook something else that is perhaps just as important: how they take title to their new home. It’s a fact that most married couples choose joint tenancy. However, joint tenancy will create future tax liabilities if one of the spouse dies and the property is sold.read more
What is the difference between a “Will” and a “Living Trust”
Most homeowners do not know the difference between a “Will” and a “Living Trust”. This article will explain the basic differences. In Southern California, if you own a home, you should definitely have some sort of estate planning. Having a will or a living trust is what the legal community refers to as “estate planning”. Both wills and living trusts are documents that facilitate the passing of your assets at your death to whom you want them to go to. If you don’t have a written will or living trust, then the California’s intestacy law controls and dictates who gets your assets.read more
10 Percent Deposit?
Are purchasers in a probate transaction required to submit a deposit of 10% of the purchase price in Los Angeles, Orange, Riverside, San Bernardino, or San Diego Counties?
The answer depends on whether your have full authority or limited authority.read more
What Happens If You Die Without a Will?
If you die without a will (also known as dying "intestate"), the State of California will decide how your assets are to be distributed. All community property and quasi community property will be given to your spouse. Separate property will generally be distributed according to California Probate Code 6401 and 6402:.read more
What Realtors Must Know About Probate
In California, if your client dies without a living trust and his or her house is worth more than $166,250, then the only way you can sell the house is to have your client go through a probate.
The probate process starts with filing of the probate petition. You cannot sign the listing agreement unless the court has issued your client a form called "Letters". Letters signifies that your client is the official personal representative of the deceased’s estate. This form will tell you if the personal representative has either full or limited authority to sell the house. If you are selling real estate, you always ask the probate attorney to petition the court to give your client full authority.read more